Vista Energy, S.A.B. de C.V. (VIST) Q4 2025 Earnings Call Transcript

Good day, everyone, and thank you for standing by. Welcome to VISTA's second quarter 2026 earnings webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to Visa Strategic Planning and Investor Relations Officer, Alejandro Chernikov. Please proceed.

Good morning, everyone. We are happy to welcome you to VISTA's second quarter of 2026 Results Conference Call. I am here with Miguel Galucho, VISTA's Chairman and CEO, Pablo Verapinto, VISTA's CFO, Juan Garobi, VISTA's CTO, and Matias Weisel, VISTA's COO. Before we begin, I would like to draw your attention to our cautionary statement on slide 2. Please be advised that our remarks today, including the answers to your questions, may include forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these Our financial figures are stated in U.S. dollars and in accordance with International Financial Reporting Standards, IFRS. However, during this conference call, we may discuss certain non-IFRS financial measures such as adjusted EBITDA and adjusted net income. Reconciliations of these measures to the closest IFRS measure can be found in the earnings release that we issued yesterday. Please check our website for further information. Our company is A Sociedad Anónima Bursátil de Capital Variable, organized under the laws of Mexico, registered in the Bolsa Mexicana de Valores at the New York Stock Exchange. Our tickers are Vista in the Bolsa Mexicana de Valores and BIST in the New York Stock Exchange. I will now turn the call over to Miguel.

Thanks, Ale. Good morning and welcome to this evening call. The second quarter of 2026 was marked by the closing of the acquisition of a keynote asset in Baca Muerta. This milestone, in combination with the organic growth, took our company to a new scale, leaving us in an excellent position to capture the upside of higher oil prices. As a result, adjusted EBDA and free cash flow generation record substantial interannual and sequential increases. Total production was 156,000 biogies per day, 32% above the previous year. Oil production was 135,000 barrels per day, up 33% vis-a-vis the previous year. Total revenues during the quarter were $1.15 billion, an impressive growth of 89% compared to the same quarter of last year. Lifting costs was $4.5 per BOE, 4% below year-over-year. Capital expenditure was $467 million, driven by strong progress in new well activities during the quarter. Adjusted EVA was $805 million, an interannual increase of 99%. Net income was $322 million, an increase of 37% compared to the same quarter of last year, and 199% versus the previous quarter. Occluding the gain from La Margachica acquisition in Q2 2025, In 2005, net income expanded by more than nine times year-over-year. We record earnings per share of $3 during the quarter. Net of the Keynote acquisition payment, free cash flow was $491 million, reflecting a significant boost in a saturated BDA generation and a meaningful improvement in working capital. Finally, our net level ratio at quarter end was 1.41 times adjusted EVDA. On a performance basis, reflecting last 20 months figures for the acquired asset, the ratio was 1.25 times adjusted EVDA, marking a significant reduction year-on-year and reflecting a very strong balance sheet. Total production during Q2 averaged 156.1 thousand bios per day. This represents an inter-anual increase of 32% and a sequential increase of 16%. There are two drivers behind this boost. The first is organic growth. We connected 19 new wells in the last 12 months with very solid productivity, generating a 20% production growth compared to Q2 last year. On top of this, the consolidation of our working interest in Mandurria Sur, Embajada del Toro, as of May 1st, added 14.2,000 barrels of oil equivalent per day on average for the quarter. This reflects a run rate of about 21,000 bioeats per day, which will impact fully in the third quarter. Our total production in May and June was, on average, 161.6,000 BOE per day. Quarterly average oil production was 135.4,000 barrels per day, 33% higher year-over-year, and 60% above the previous quarter. Gas production increased 30% on an interannual basis and 15% sequentially. Total revenues during the Q2 were $1.15 billion, a material growth of 89% compared to the previous year and 66% versus the previous quarter, driven by a solid increase in oil production and higher oil prices. Oil export increased 54% year-over-year, reaching 8.6 million barrels in the quarter, representing 72% of our oil sales volume. Radized oil prices in Q2 was $89.4 per barrel, 44% above the previous year, and 49% above the previous quarter, in both cases driven by higher brands and an improvement in differentials. We sold 100% of our oil volumes at export parity prices, both domestically and internationally. In Q2, lifting costs were $4.5 per VOE, an interannual reduction of 4%, reflecting our low-cost asset base and thick cost dilution as we continue to gain scale. On a sequential basis, lifting costs increased driven by the impact of inflation on PESO-denominated goods and services amid flood effect rates. Selling expenses were $4.1 per BOE, an 8% increase year-over-year, mainly driven by higher oil prices impacting turnover tax. adjusted EVDA during the quarter was $805 million, 99% higher interannually and 79% higher sequentially, driven by a material expansion of revenues amid flood unit cost. Similarly, adjusted EVDA margin was 70%, an expansion of three percentage points compared to the same quarter of last year and five percentage points above the previous quarter. Net back increased 51% year-over-year to $57 per VOE. In Q2 2026, cash flow from operating activities was $985 million, reflecting a decrease in working capital of $274 million, dollars mostly driven by the full normalization of the working capital position of our trading subsidiary base we also made an income tax payment of 53 million dollars cash flow used in investment activities was 886 million dollars reflecting accrued capex of 467 million dollars the 392 million dollars payment related to the QINOR acquisition and an increase in capex related working capital of 21 million dollars net of the QINOR acquisition free cash flow was 491 million dollars during the quarter leaving us well placed to deliver on our annual guidance cash flow from financing activities was negative 110 million dollars driven by the repayment of borrowings for 810 million dollars and interest payments of 88 million dollars partially upset by proceeds from borrowings for 856 million dollars finally our cash position remains very strong standing at 605 million dollars at end of q2 our net leverage ratio stood at 1.41 times adjusted EVDA or 1.25 on a pro-forma basis considering the last 12 months of adjusted EVDA for the acquired assets. To conclude this call and before we move to Q&A, I will make some closing remarks. During Q2, we materially increased the scale of our company on the back of a solid organic growth and the successful closing of the acquisition of our interest in the Bandurria Sur, Embajada del Toro blocks in Baca Muerta. This allowed us to capture the benefit of the oil price spike in Q2, leading to a substantial boost to adjusted EVDA and free cash flow generation. In line with our capital allocation framework, we plan to use part of the free cash flow to reduce our net leverage ratio to our target of around one times by the end of the year. We made very good progress on our annual work program and are well on track to deliver our 2026 guidance. We are maintaining our $3 billion HAT-DBDA guidance at $85 per barrel as of now, now, but I want to provide a sensitivity due to the prevailing volatility in all prices. For every $10 per barrel change in the second semester, adjusted EVDA changes approximately $200 million.

Before we move to Q&A, I would like to thank all Vista employees for their hard work during the quarter, as well as our investors for their continued support. operator we can now move to Q&A thank you so much and as a reminder to ask a question simply press star one one to get in the queue and wait for your name to be announced to withdraw your question press start one one again our first question is from Alejandro de Micheles with Jeffries please proceed yes good morning gentlemen thank you much for taking my question

Miguel, one question please, you just have consolidated just Bandurria Sur and Bajo del Toro, could you please provide some kind of color of how that is going and how you see in the development of these assets going forward, please? Thank you.

Hi, Ale, thank you very much for the question. Yeah, we took over our share in the asset in May and everything I have to say is moving alone as we expected. Our share was consolidated approximately 19,000 BOE per day in Bandurri Azur and 2,000 BOE per day in Bajada del Toro. In Bandurri Azur actually we have three rigs running, so you can expect production to remain relatively flat or maybe it can grow slightly toward the end of the year. We also start in the discussion with our partners with YPF regarding the plan for 2027. Baja del Toro, as you know, is an appraisal block. The plan we are analyzing with YPF is to file re-application this year and over the next two years we will then drill some pilot welds to erase some of the areas and land the zone and start to contract the facilities based on what we believe could be the production of the block. And we will then, as we said, plan to move to full development and contract and put some dedicated rig to develop Baja del Toro. Thanks, Ale, for your question. Thank you.

One moment for our next question, please. It comes from Daniel Guardiola with BTG Pac-12. Please proceed.

Hi, good morning, Miguel and team, and thank you for your presentation. I have a question on the production outlook for the company. Could you provide us the expected quarterly production trajectory through 2026, including the contribution from Bajo del Toro and Mandurria Sur? And another question on production outlook is, I would like to know if for 2027 and 2028, where you expect significant organic growth, is there a specific Brent price threshold at which you would rather to prioritize free cash generation over production growth? And if so, how should investors think about the trade-off between growth, shareholder distributions, and maintaining leverage within your target range?

Thank you. Good question.

So starting with the first part, the consolidation of Bandurri Azur and Baja del Toro took us about 160,000 barrores per day. Month today in July, we are at 162. We forecast Q3 at 160 and Q4 at 170. And we are confident in reaching our guidance that we provide that is 148 barrel hoid per day equivalent for the year. I am personally probably a bit more optimistic that we can even go a bit about these numbers. Related to your second part of the question, I mean, we make our plan at 65. That happened in November last year, so we said you should consider that we are not going to revise anything of those numbers at the moment, and of course at some point of time we need to re-guide, we will do it. But for the moment, those are the numbers. Thank you for your question.

Thank you, Miguel.

Thank you. Our next question is from Tassel Vasconcelos with UBS. Please proceed.

Hi, Miguel. Hi, Tim. Thank you for taking my question. Miguel, I think I might have some kind of follow-up question on these capital allocation alternatives. If you look at the production outlook that you have released for 2026 and 2027, and assume a brand at something close to $70 per barrel, we view here that Vista could end 2027 close or even below one time net debt to EBITDA. You still haven't paid any dividends, but you were quite successful in doing some very, very accretive M&As. From now on, what's the best capital allocation alternatives that you see for Vista? do you still view some additional M&As on the radar as an alternative here, or the event should become a high priority for Vista?

Thank you.

Thank you, Tasso, for your question. Yes, look, as I always have stated, growth has been and remains our priority within our capital allocation strategy. With the additional cash that we generate, we will still keep full flexibility within the capital allocation metrics that we have shown many times. That means continue seeking M&A, additional capex now for the RIGI projects that create a new opportunity for us in the future, and buyback in the short term, and potentially the final return to shareholder policy that we have discussed before, and I think we are not at the stage to do it today, but it's something that we will consider in the future. Now in the mid-year term, the focus is to deliver the company, and as we stated in this call, to close 2026, very close to our aiming that is one-time net leverage ratio, if it's possible with the cash that we have generated, we believe that is possible to achieve. So, our capital allocation mindset today is around all those dimensions.

Very clear, Miguel.

Thank you. Our next question comes from Leonardo Marcondes with Bank of America. Please proceed.

Hi, Miguel. Hi, everyone. Thank you for picking my question here. So, my question is regarding the drilling and completion capex for the wells. I mean, given the strong pickup in vacuum water activity and the significant decline near-to-date in Argentina's counter-risk, do you see room to renegotiate lower fees with the oil service companies that are putting their rigs and equipment in Argentina? Thank you.

Thank you, Leonardo, for the question and a good one. So as Argentina macroeconomics continue its normalization process, price of oil services became for me more a function of scale, volume, and I mean scale and volume is the same thing, and competition. Nevertheless, as we said, VISTA has demonstrated once again that innovation continues to play an important role in reducing the NC cost. An example of this are the latest progress that we did in cost reduction within the completion process. As an example, we moved sand supply from 1,000 kilometers away to Invasin or Baca Muerta mining supply and lately to Bajada del Palo, that's basically tens of kilometers away from where we operate. We are re-engineering the completion process to move to wet sand that also cut a lot the cost of supply sand and now we are switching from our frack pump from gasoline to gas pump that also is reducing cost. So I will say today, I mean, with the macroeconomic situation of Argentina, again, I will say competition, scale, and I will not discount innovation, particularly after what we have demonstrated. Of course, as the macroeconomic continue improving, that is all good news, and that helps definitely. Thanks for the question, Leo. Thank you very much.

Thank you so much. one moment for our next question. It comes from Guilherme Martins with Goldman Sachs. Please proceed.

Hi, Miguel. Hi, Tim. Thank you for taking my question. I have a quick one for my side here. If you have a pipeline, could you please explain to us how provided an update with the development of the pipeline? And also, if you could comment, do you see any risks of having to use trucking again, particularly when considering you expect rampage in production in the second half of the Thank you.

Hi, Guillermo.

Thank you for the question. The project contraction of BEMOS is basically progressing very well. Overall, the project execution today is 65 percent. The pipeline is at 82. Onshore storage, I will report it is at 38, and the offshore terminal at 73. So we forecast that the full project completion date will be by the middle of 2027. Having said that, and I think Horacio commented, the shipment of very specific components like the mooring buoy is being affected by the straight-out moors closure, and the BEMOS team is basically analyzing different alternatives to solve that issue. But the project remains on the schedule, and so far we don't expect any changes in our plan of evacuation, neither the need of adding tracking capacity. So we are positive with the progress overall. You're welcome.

Thank you. Our next question comes from the line of Andres Cardona with Citi. Please proceed.

Good morning all. I have a question about M&A, right? We are seeing interest from permanent players in entering Vaca Muerta. Would you consider any opportunity to farm in areas such as Aguilamora or Baja del Tolor to try to maximize the value and production profile? And on the other hand, you mentioned growth remains a key pillar of the investment case. And I wonder if you see any opportunity over the short term. You are evaluating any opportunity as of now.

Hi, Andres.

Thanks for the question. So, as we said, as you know, we not only have been very successful operating back and Muerta asset, but also we have been very successful creating values through M&A. World track record in the last few years is the acquisition of Aguada Federal and Bandurria Norte, Huiconoco, Phillip, and Wintershall 2021 and 2022, La Marga Chica last year from Petronas, and most recently Bandurria Sur, Embajada del Toro, from Equinor. So needless to say, with the strategy that we have today, we are always using our full creativity to continue consolidating core acreage in Baca Muerta shale oil assets. That continues to be our focus, and we continue looking and being very creative in anything that we can add to what we have. Respect to our accurate position in the north, we, at the moment, we are not looking and to dilute ourselves, particularly in the current market condition, and with a strong balance sheet that we have at the moment. And so it's not something that we are thinking of today. Of course, conditions can change and the strategy can change and we can do something different in the future. But no, at the moment, that's not the way that we look at that area.

Thanks for the question.

Our next question comes from Michael Furo with Pickering Energy Partners. Please proceed.

Good morning, Miguel, to the rest of the VISTA team there. given the strong start to the year with 50 net times already completed by the end of the quarter the 100 to 110 annual guide appears achievable to us so if efficiency gains continue and provide the company with the opportunity to drill and complete more wells this year than originally planned how would you think about the trade-off between staying within the current activity and capex budget versus you know capitalizing on these efficiency gains by adding a few more wells this year but potentially spending a bit more than the current plan hi michael uh yeah interesting way of looking at this so uh i think uh i think we should we should probably look to different

elements of that question i think as the basin continue gaining scale and competition i believe i'm convinced more than believe that there is room to gain cost efficiencies in our operation and back-and-mortar overall, as you know, I mean, when we compare with Permian, we're still having a gap in terms of cost. But I believe there is less room to improve operational efficiency. For example, drilling time or number of fracking stages per day, when you compare where we are today I mean we are we are very efficient what we do so far so therefore there's limited upside to increase activity in the in the very short term with the current oil service equipment and drilling rig that we have in the country of course if the service companies bring more equipment to the country I think in midterm a long time we can we can do better but in the short term, I don't think the efficiency gap that we have, in particular Vista, will allow to do really more with the same equipment. Yes, we're still having a gap for cost saving.

Thank you, Miguel. Appreciate the call there. I'll turn it back.

Thank you. And we have a question from Tiago Casqueiro with Morgan Stanley. Please proceed.

Hey, good morning. Thank you for taking my question. I think most of my questions were already addressed here. So, Miguel, over the past few months, we have seen some projects across the industry being submitted to the VIGI framework. So I would like to better understand here how has been the process for Vista so far in terms of timeline. You mentioned in the first question the plan to add Barro del Toro in the framework. But should we still think of Aguila Mora and Banduria Norte as other projects most likely to be included? Or has your thinking about the scope of the submission changed?

Hi, Tiago. Thanks. So, yes, we are currently finalizing the documentation to file the application of RIGI for Bandurria Norte, which will probably take place in the coming weeks. We are also working on other projects, Aguila Mora, Corina Unamargo Norte, Embajada del Toro with YPF. Now, that should go to the Secretary of Energy. He has a team where he analyzes all the information before approval. And what we are seeing is that process, it will take a few months. So the short question, yes, we are going to file those projects, one very soon, and then And we have to take a few months to get the result from the Secretary of Energy. But yes, I mean, we are very happy with what the government did in terms of the RIGI, and that clearly has helped us to push forward some of the projects that we have in our plan.

Very clear.

Thank you. One moment for our next question is from Vicente Salanga with Bradesco BBI. Please proceed.

Emilio Alejandro, all of Vista's team, thank you for taking my question. We noticed that Bajardo de Palo Oeste's production dropped from March to May. I wanted to know if there's anything particular going on there, or just a cyclical process of tying up wells, and if you could share with us what was your exit output for Bajardo de Palo Oeste in the quarter.

Thank you very much. hi Vicente thanks for the question so let me let me probably put your your question in context or let's look at the big picture of development the rationale of our development plan and activity is based in many elements one is of course production the other is delineation and the risking of the future areas where we are looking for development or to drill, facility capacities, minimizing frack heat. So there are many things that we look at and all those elements we look at within the full core development hub, which include Baja del Palo Este, Baja del Palo Este, Agua Federal, So there's nothing specific that is going on today in Bajara del Palo Este and the overall production in the operative core development hub grew 10% from Q1 to Q2, basically when, if I remember properly, from 83,000, I think, to north of 90,000 barrels of oil per day equivalent. So then of course if you look at field by field that you can see changes or you can see a field dropping and another field coming up, but the rationale is not based on those field names. We take the full development hub, the full core development hub as one and we allocate capital activity based on the elements that I said before. Great.

Thank you very much and good luck on Sunday. Thank you very much.

Thank you. And this will conclude our Q&A session and I will turn the call back to Miguel Galuccio for closing comments.

Well, very strong quarter, guys. Thank you very much for the support. Once again, thank you to all the VISTAs employees, co-workers, friends that have made us to come to the point that we are today. A very strong company and we're looking forward to continue performing and delivering. Thank you very much and have a good day.

And this concludes our conference. Thank you for participating and you may now disconnect.